The divorce financial settlement and division of assets process can be complicated enough, even before having to be concerned about the impact of a third party being involved. This can not only increase legal costs but can also increase the length of time it takes to settle.
East Midlands Divorce and Financial Settlement Firm, Fair Result shed light on exactly how third parties are involved during the financial settlement process, and how to limit this to create a much smoother process.
When can a third party make a claim?
A third party will usually seek to join the financial proceedings and division of assets to defend their own interests. They will only be allowed to join the proceedings if the court agrees that their interests need to be protected or challenged, additionally, it is important that the third party gets involved in the proceedings as early as possible to help the court to determine the validity of the claim.
There are two main scenarios where a court will allow a third party to join financial proceedings and division of assets:
- A spouse may ask that the third party joins ongoing divorce proceedings, this will commonly be in circumstances where the opposite party is set to benefit from an asset in the third party’s name. This will be done so that the invitee can challenge the legitimacy of the opposition claim.
- A third party may join proceedings if they have a share of matrimonial assets which are being disputed and want to defend their own interests. This claim can be supported by one of the spouses but this is not essential for them to be involved.
How does the court determine a valid third-party claim?
The court will consider two factors:
- If it’s essential that a third party is involved to resolve a dispute.
- If it’s desirable that the third party is involved to resolve a dispute in a case where there is an ongoing issue between an existing party, that is connected to the dispute in divorce proceedings.
The court will also need to consider whether the increased costs & court time are proportionate to what the third party is there for. If the disputed asset won’t be sold or transferred, the third party may not be required to participate as their interests won’t be affected.
How are divorce proceedings affected by third-party involvement?
- Third parties will need to be represented separately if they seek to join the financial proceedings.
- A preliminary hearing will usually be required prior to a third party officially participating.
- The third-party claim needs to be settled before a financial outcome has been determined which can lead to a delay in the overall proceedings.
- The court may also hold an additional hearing where the third party will need to provide evidence around their claim.
- Considering a third-party involvement will increase legal costs for all parties involved.
- If the claim fails to be settled, one of the divorcee’s final financial share of the financial settlement could be significantly affected.
If you are considering involving a third party in your divorce, you need to carefully consider the increased risk and cost and whether it is worth it.
Is there a way to limit third-party involvement in your divorce process?
There are steps that can be taken to prior to financial proceedings to limit the involvement of a third party.
- Make sure to record all friends, relatives, or business partners in a declaration of trust or loan agreement.
- You can register a restriction at the land registry, this will notify the invested party before the asset is sold.
- Keeping detailed records with any evidence of financial contributions made during your marriage can be hugely beneficial.
Not only will steps help to limit third-party involvement during financial proceedings, but they will also make the process move much more quickly.
Fair Result Director and Lawyer commented “It’s especially important to be strategic and careful if you’re the one who is involving a third party. Adding a third party to an already complicated process can not only increase legal costs but it is also very likely that the process will take considerably more time to settle”
View more information on third-party involvement and examples here